Metro Bank plans to cut about 800 jobs by the end of March, and review its famous seven-days-a-week branch model, after ramping up cost-cutting plans in the wake of last month’s multimillion-pound rescue deal.
The lender said plans to cut a fifth of its 4,000-strong employee base followed “further evaluation of the cost base”, which found it could save up to £50m a year, including by investing in automation and potentially scaling back opening hours for its 76 branches.
That is higher than original estimates, with Metro saying last month that it planned to cut £30m in costs, days after it clinched a £925m rescue package from investors in early October.
The deal avoided a potential breakup or takeover by a rival UK bank. Instead, it resulted in Metro – which was co-founded by the US billionaire Vernon Hill in 2010 – coming under the control of another wealthy businessman, the Colombian billionaire Jaime Gilinski Bacal.
The ramped-up cost-cutting drive comes as little surprise, given that Bacal – who now owns a 53% stake in Metro – made his fortune snapping up and turning around ailing lenders in Latin America
Staff currently account for about 45% of Metro Bank’s overall costs, which became the UK’s first new high street lender in 150 years when it burst on to the scene in 2010 with a big focus on in-person banking.
The chief executive, Daniel Frumkin, said in a statement that Metro Bank was “committed to stores and the high street but will transition to a more cost-efficient business model while remaining focused on customer service. These actions alongside other initiatives to reduce costs are expected to deliver savings of up to £50m per year on an annualised basis.”
Metro said it would “simplify its operations”, while “investing in automation for service and back-office operations and improving digital channels, particularly for deposits”.
It said: “These actions are expected to result in a 20% headcount reduction but will not impact areas of growth,” noting it was charging ahead with plans expand its branch network into the north of England.
The lender said it would also be “reviewing seven-day opening and extended store hours across the store network”, and was already in discussions with the Financial Conduct Authority about the potential impact that reduced hours may have on its customers.
The cost-cutting plan, which will result in a one-off charge of £10m-15m, will probably be completed by March.
Shares rose 5% after the announcement on Thursday.